Subjects, Objects, and Market Exchange: The
Emergence of Sale of Goods as Law of Consumption
Noah Quastel, B.A.(Hon.) M.A, L.L.B. LLM Candidate, University of Victoria, Faculty of
Law; Member of the Law Society of British Columbia
May 20, 2006
Submitted as paper for RC-24 Sustainable Consumption and Society
Draft copy--Please do not cite without author’s permission.
A significant number of theorists now construe consumer goods as elements within
“commodity networks”, accentuating the ways persons and things are intertwined in
extensive and at times global systems. The approach emphasizes that commodities
broadly construed as objects for sale (not just their raw ingredients) are what they are
because of the way diverse actors use, distribute, design, manufacture, grow, mine or
cultivate them.1
By focusing on particular goods such as coffee, running shoes or
wooden furniture, researchers who use the approach accentuate the ways in which
consumers are enrolled in networks through their purchase decisions, and that networks
are constituted by cultural and symbolic aspects.
The approach thus places emphasis
on agents’ subjectivity. The commodity networks approach helps scholars provide an
account of the ways human discourses and self-understanding become translated into
practical activities and relationships with distant ecosystems and human communities.
Commodity networks are instances of the global capitalist economy and provide a
smaller scale reference point for understanding the links between trade, the
environment, geo-political power and the enrollment of consumers.
1Commodity
network theorists include: Leslie, D., and Reimer, S. (2004). Knowledge, ethics and
power in the home furnishings commodity chain. Geographies of Commodity Chains. Alex
Hughes and Suzanne Reimer. New York and London, Routledge: 250; Hughes, A. and Reimer,
S. (2004). Introduction. Geographies of Commodity Chains. Alex Hughes and Suzanne Reimer.
London and New York, Routledge: 1.; Goodman, D. and Goodman, M. (2001) "Sustainable
Foods: Organic Consumption and the Socio-Ecological Imaginary." In Exploring Sustainable
Consumption: Environmental Policy and the Social Sciences, edited by Maurie Cohen and
Joseph Murphy, 97-119: Elsevier Science Ltd. Raynolds, L. (2004) “The Globalization of Organic
Agro-Food Networks” World Development Vol. 32, No. 5 p. 725-741) Whatmore, S. and L.
Thorne (1997). Nourishing Networks: Alternative Geographies of Food. Globalising Food:
Agrarian Questions and Global Restructuring. D. Goodman and M. J. Watts. New York,
Routledge 287-304
1
Commodity network analysis provides a unique description of the exchange process
whereby goods are traded: “Such webs not only connect firms through vertical
commodity exchange relationships, but also bind together additional agents through the
multi-directional flows of information and materials that variously support these
exchange relationships”.2 Exchange is one of the central components of networks and
agents’ subjectivity as part of networks.
Exchange in western capitalist countries is
mediating by legal constructions. To understand how exchange works in our societies
we need to look at the laws of contract and Sale of Goods. These laws remain largely
unchanged since the nineteenth century and are central to the enablement of commodity
networks. They developed in concert with many of the central commodity networks of
the modern world which we owe to English colonialism, such as tea, sugar, coffee and
textiles. Through acting on person’s subjectivity and providing a legal picture of the
exchange process these laws in part constitute existing commodity networks. Insofar as
sustainable consumption concerns the problems with these networks, it must also
concern the exchange processes that lie behind them.
The network theorist’s understanding of exchange suggests that individual consumer
transactions are part of larger networks by which commodities are produced, distributed
and come to market. The approach sees exchange as part of a series of relationships
that bind persons together and facilitate the flow of goods in commodity networks. The
theory is a second order account, on the part of theorists, to explain the exchange
phenomena.
Actual agents may in fact not share this picture at all.
Individual
consumers may be totally unaware or unconcerned with the wider relationships to
distant workers or ecosystems that are embodied in the simple decision to buy Nike
running shoes or Chilean wine. When we look at the history of contract law and Sale of
Goods we see that precisely this sort of unreflective understanding of exchange is both
worked into and justified by the law.
Not all consumption involves the purchase of
goods, but when persons do buy consumer goods, they enter into consumer
transactions. Understanding consumption requires understanding the way contract law
and Sale of Goods works to structure our relationship to consumer transactions, the
ways we think of ourselves, and the objects we buy.
2
Hughes and Reimer, 2004 ibid. at p. 5
2
Understanding consumption through consumer transactions requires investigating into
the contingent “architectonics” of exchange—the way subjects (persons), objects
(consumer goods) and exchange are discursively presented and actually practiced in
historical specific contexts, and how these can change.
To speak of contingent
architectonics is to recognize that there are a multitude of different ways of
understanding exchange and practicing exchange relationships. Architectonics is also a
way of bringing out how the difference concepts work together and mutually interact.
Network theorists have analyzed the ways fair trade goods such as coffee make for
different commodity networks.3 If consumers, producers and others engage in networks
through calculated profit maximization alone different networks develop (with different
effects for workers and ecosystems) then if consumers are to pay a “fair price” to
guarantee farmers’ earn sufficient amounts to meet basic human needs.
Different
modes of exchange make the difference to commodity networks and the people who are
involved with them.
Investigating the history of Anglo-American contracts and the Sale of Goods that grew
out of contract law in the nineteenth century is a way of understanding markets and the
ways persons and things are shaped in them: It is a way of uncovering the “historical
ontology”4 of consumption and its practices. The laws of contract and Sale of Goods
plays a mediating role in bringing categories of subject, object, and exchange into play
on a daily level; they are, “constitutive rather than declaratory of the ontology upon
which they are based”.5
Semiotic and discourse analysis suggests that textual moves
“constitute” the readers of such texts, that is, position them as having particular selfunderstandings and as acting in certain ways.6 Law, like any language, is a way of
world-making, one discourse amongst many that potentially influences our selfunderstanding.7 We are not merely pushed and pulled by laws that exert power over us
from the "outside".
Instead “we come, in uncertain and contingent ways, to see
3
Whatmore, S. and L. Thorne ibid. at p.295
Foucault, M. (1997) “What is Enlightenment?” -- Ethics Subjectivity and Truth. Essential Works
of Foucault 1954- 1984 Volume One. ed. P. Rabinow. New York: The New Press. See also
Hacking, Ian (2002) Historical Ontology. Harvard University Press.
5 Pottage, A. (2004) “ Introduction: The Fabrication of Persons and Things” Law, Anthropology
and the Construction of the Social: Making Persons and Things. Cambridge University Press. Ed.
A. Pottage and M. Mundy at p. 9
6 Dugdale, A. (1999) "Materiality: Juggling Sameness and Difference" Actor Network Theory and
After, edited by John Law and John Hassard. London: Blackwell at p. 125
7 Goodman, N. (1978) Ways of Worldmaking. Harvester Press.
4
3
ourselves as law sees us”.8 Tracing the historical development of concepts of subjects,
objects and exchange in contract law helps make this apparent. Law becomes in Bruno
Latour’s phrase a “plug-in” –a vehicle that provides us tools for becoming who we are,
and which we can consciously choose or find ourselves already utilizing as we are
“made to be an individual/subject”, a “psycho-morph” that “literally lend you the shape of
a psyche”.9
In the interlocking concepts of subject, object and exchange found in the
Anglo-American tradition of contract and Sale of Goods, understandings of objects
become ways of understanding the self. Over time, persons and things have come to be
understood as distinct entities rather than as interrelated through processes with other
humans and non-humans. By tracing the history of contract we can see how it is that
subjects and objects have come to be understood as disentangled from social and
ecosystem constraints.
This paper provides an overview of the history and the central concepts of classical
contract law and concentrates on a close reading of formative cases in the law of Sales.
It focuses on England in the nineteenth century because this is when the basic changes
in the law occurred which shape practice in the exchange of goods in the AngloAmerican world. This law parallels the American case law which came to be codified in
the United States Uniform Commercial Code and also the Untied Nations Convention on
Contracts for the International Sale of Goods. The principles of contract developed at
this time provided the “natural and organic conditions of the private sphere and the
grundnorms for international commercial relations.”10 A comprehensive history of these
areas is well beyond the scope of this paper. Rather, the focus is on a historically
informed overview of the concepts of subjects, objects and exchange in contract cases
concerning the sale of goods in the nineteenth century and key points which illustrate the
problematics of exchange for those interested in commodity networks and consumption.
6.2 Early modern markets
The story requires us to go back to the development of the common law in England.
Taking a historical approach helps to see the shifting terrain on which laws have
developed and variously employed different values concerning market place conduct,
Sarat “Legal Education in Law Schools” at p. 132
Latour, B. (2005) Reassembling the Social: An Introduction to Actor Network Theory. At p. 213,
but see general description of “plug-ins” from 204-213.
10 Cutler, C. (2003) Private Power and Global Authority. Cambridge University Press. at p. 161
8
9
4
the establishment of prices and the concepts and normative basis for the enforcement of
agreements. Two early features are important for setting the stage for the development
of modern contract law in the eighteenth and nineteenth century. One concerns the
rephrasing of the concept of contract in law. The second concerns the regulation of
consumer markets and its links to the wider social and economic transformations of
England before and during the industrial revolution.
At least since the 1540s the Kings’ Bench operated as a commercial court, and one
could sue in assumpsit upon the occasion that money was owed for a trade in goods.11
Confusion was well cleaned up by Slade’s Case (1602) which established that an
agreement to exchange in the future (an “executory contract”) implied an undertaking or
assumpsit to pay what was due under it and so provided for the right to recover debts.
The case law also reveals that the law at the time was certainly sufficient to allow for a
robust trading economy: Bates’ Case (1606) is a famous pre-Civil War case concerning
the rights of the monarchy to tax international trade, and concerns the import of currants
from Venice. Basic frameworks in the common law were thus in place for the resolution
of commercial disputes for centuries before the industrial revolution.
Critical legal scholars and historians in the 1970s made much of the transitions in
contract law in the nineteenth century, hoping to link contract law to the development of
the industrial revolution and what Karl Polanyi had thirty years earlier referred to as the
“great transformation” in England.
Horowitz argued that contract was created by
capitalism and the need for future planning,12 such as in futures markets on stock
exchanges. Similarly, Atiyah argues that the new formulation of contract was tied to
economic liberalism and laissez faire values.13
However, if one looks just at the
common law cases the picture that emerges, in the movement from assumpsit to
contract in the nineteenth century, is one largely of reconceptualization. Many older
actions are given new names and new theoretical justifications. However, this
reconceptualization of contract was tied to the rise of the new political economy and
laissez faire markets and did give rise to changes in the way cases were decided. The
nineteenth century features a subtle but important shift in the legal concept of exchange.
11
Baker, J.H. Introduction to English Legal History. Butterworths, 1979. at p. 283.
Horowitz, M. J. (1974). "The Historical Foundations of Modern Contract Law." Harvard Law
Review 87(5).
13 Atiyah, P.S. (1979) Rise and Fall of Freedom of Contract. Clarendon Press. Oxford.
12
5
Plenty of cases in the seventeenth and eighteenth centuries demonstrate how one could
sue if horses were not delivered, money was owed, or jewels were fakes. The difference
under the new law of contract that was reformulated first by Judge Mansfield in the late
eighteenth century and then by subsequent judges in the nineteenth, was two fold. First,
under assumpsit the idea was that someone had voluntarily agreed to do an act, in
exchange for a sufficient consideration (such as money). Having paid or agreed to pay
money or some other personal sacrifice, one party then relied upon the other. In the
case the agreement fell apart, this was considered as a nonfeasance, a breach of
obligations one was relied upon to perform. The party in the wrong had acted
deceitfully.14
The relationship between the parties was cast as a series of
interdependencies, foremost of which was reliance. These considered the nature of the
relationship and practices the parties were involved in.
One did not owe money on a
transaction because of a mere promise, but because the relationship created a
dependency on one person in relationship to the other.
In the nineteenth century the
concept of exchange would be recast—with considerable effects in the decision of
particular cases—as contract in terms of the meeting of wills of two persons, in terms of
mutual obligations created by bare promises.
When wider social events are factored in, it becomes apparent that the eighteenth
century and early nineteenth century were times of a weakened government, a rapidly
expanding and globalizing commodity economy, and social pressures brought by
industrialization and urbanization.15 Assumpsit was merely one potential avenue of legal
redress available that had been available in the early modern period. Just as contract
and Sales of Goods are today only a small part of the elaborate framework of regulation
of consumer goods, the Middle Ages and early modern periods in England featured a
complex arrangement of weights and measures, and controls of markets in the Assize of
Bread and Assize of Beer. These provided for detailed regulation of local markets and
embodied a variety of social values. A paternalistic model existed not only in law, but in
the consciousness of the labouring poor who at times would riot in support of the system
that protected them from at times exorbitant prices. There were specific directions for
14
Baker, ibid. at p. 281
Thompson, E. P. (1971) “The Moral Economy of the English Crowd in the Eighteenth Century.
Past and Present. 50: 76-136; Hamilton, Walton H. (1931) “The Ancient Maxim Caveat Emptor”
Yale Law Journal Vol. XL. No. 8, p. 1133
15
6
different classes of persons. It was specified when farmers could sell their grains (not in
the fields, only to dealers in specific situations), to the poorer classes first, in small
parcels, with duly-supervised weights and measures in specific markets. Dealers were
regulated, with laws against forestalling, regrating and engrossing.
They were not
allowed, for instance, to buy standing crops, nor might they purchase to sell again (within
three months) in the same market at a profit, or in neighboring markets. The Assize of
Bread regulated the price of loafs by weight and in relation to the ruling price of wheat.
16
“Law was conceived of as protective, regulative, paternalistic, and above all, a
paramount expression of the moral sense of the community.”17
These regulations began to wither by the time of the industrial revolution. The history of
markets in England in the modern period is not one of a slow progression towards
government regulation of an otherwise natural and preexisting market. Rather, the
eighteenth and early nineteenth centuries were periods of deregulation as traditional
controls in the marketplace were gradually loosened or simply fell apart to meet the new
demands of industrialization. The breakdown of the Assize system and the relevant
impoverishment of protections for shoppers in the nineteenth century helped turn the
new law of contracts into consumer law. The result of this transformation was that
consumer transactions came to be seen as only a special case of the larger class of
commercial transactions.
Shifts in social and economic conditions in the late eighteenth century also contributed to
making contract central in the lives of the majority of people.
Industrialization and
urbanization meant that the majority of the population shifted from peasant farmers to
wage labourers.
This brought the reconfiguration of person from the status bound
position of peasantry to that of free contractors for labour dependent on money
transactions and contract concerning employment.18 Corresponding to urbanization was
a shift towards purchased food as the basis of subsistence: An open marketplace came
16
Thompson, ibid. at p. 85-7
Atiyah, ibid. at p. 167 citing Horowitz, M.. (1975) “the Rise of Legal Formalism”19 American
Journal of Legal History 251
18 Orth, J. V. (1998). Contract and the Common Law. The State and Freedom of Contract. H. N.
Scheiber. Stanford, California, Stanford University Press: pp. 44 to 65, at p. 55 ,detailing the
relationship between the shifts in labour and contract
17
7
to dominate.19 In short, the masses became consumers and their consumer transactions
legally enframed by contract law. The person as a contracting agent would come to
serve as a key mode of legal subjectivity.
6.3 Will Theories and Classical Contract
In late eighteenth and early nineteenth century England the common law went through a
period of systematization. The idea of a separate and systematized “contract law” so
named, as opposed to the older actions on the writ of assumpsit, was new to common
law. In the European civil law tradition it had a longer history.20 Earlier continental
jurists had invoked the concept of will as part of contract making, but this was laden with
concepts of “equivalent value” and “just price” which worked to ensure a variety of
protections. Natural lawyers such as Grotius and Pufendorf used concepts of “equality in
exchange”. In an exchange, parties must receive equivalent because each wishes to
exchange and not to enrich the other party at his own expense. They saw it as intrinsic
to the contracting process and implying substantive terms, such as that a seller would
warrant goods against defects.21 Will theories began to emerge in the late eighteenth
and nineteenth centuries, whereby jurists thought of a contract as merely an expression
of the will of the parties who were creating the contract.
Increasingly legal scholars in England came to discuss contracts as a unique discipline,
and do so by reference to the raw agreements of the parties. William Paley’s Principles
of Moral and Political Philosophy (1785) stands out as one of the first texts to give a
central place to contract. Paley argued that “exchange” was the one principle that could
ever become universal with regard to the distribution of wealth.22
Consequently a
market price was always a fair price.23 Powell’s Essay Upon the Law of Contracts and
Agreements (1790) focused on a narrow set of principles for describing all contracts. He
argued that the consent of the parties alone fixes the just price of any thing, without
19
Walvin, James (1997). Fruits of Empire: Exotic Produce and British Taste, 1660-1800. New
York University Press at p. 111
20 Gordley, J. (1998). Contract, Property, and the Will--The Civil Law and Common Law Tradition.
The State and Freedom of Contract. H. N. Scheiber. Stanford, California, Stanford University
Press: pp. 66 to 88.at p. 74
21 Grotius de iure bellis ac acis II.xii.9.1; Pufendorf de iurure naturae. V.iii.I-3 cited by Gordley,
bidi. at p. 72
22 Principles of Moral and Political Philosophy Book III, part 1. Chapter III cited by Atiyah at p.
403.
23 Book III, Chapter VII, Atiyah, at p. 403
8
reference to the nature of things themselves, or to their intrinsic value.24 Pothier’s Law
of Obligations (1806), a French text, was welcomed by English judges and lawyers and
gave expression to the notion that a contract is primarily an agreement based on the
intention of the parties and it is their will which crates the legal obligation. These will
theorists regarded the will as the source of all the terms of the contract. They no longer
claimed that these terms rested on the principle of equality or the nature of the parties’
agreement. This is “essentially the theory of contractual liability which passed into
English law, and has remained there ever since”.25 By mid-nineteenth century judges
commonly referred to contract as based on the intention of the parties.
The will theory represented a significant reconfiguration of the exchange process. The
older law of assumpsit configured a series of socially constituted or even “objective”
evaluative considerations of appropriate action within relationships, but the new classical
contract approach now said it was the bare agreement of the parties that provided any
substance to their mutual obligations. Once contract was defined in terms of the will of
the contracting parties, it was then used as first principle to explain as many legal rules
as possible.26
So the change with will theories is that they introduce the will or
agreement of parties without any attempt to delimit what could legitimately be willed.
They regarded any attempt to interfere with the express terms of the contract in the
interest of justice a paternalistic.27
Implicit in the will theory, and even the idea of contract as centered on choice was the
“two-party model” of the contract. The contract terms are provided by the meeting of the
minds—the mutual promises—of the two persons engaged in the contract. Of course
multi-party contracts are possible—allowing for the meeting of many more minds—but
the important point was that other potential stakeholders or affected parties were not
conceived of as having a role in the contract formation, or in the “law” that the
contracting parties ascribed to themselves. The two party model portrays the contract in
terms of the subjective position of the parties, ignoring both the effects on other
24
Horowitz, M. J. (1974). "The Historical Foundations of Modern Contract Law." Harvard Law
Review 87(5) at p. 918
25 Atiyah, at p. 400
26Gordley, J. (1998) “Contract, Property, and the Will—The Civil Law and the Common Law
Tradition” The State and Freedom of Contract H. H .Schieber. Stanford University Press, pp. 66
to 88 at 67
27 Gordley, ibid. at p. 72
9
stakeholders or ways they themselves might think the contract should be arranged. It
thus works as a “frame”, focusing the significance of the contract away from further
linkages and relationships between the ways the two parties might characterize it. Early
nineteenth century commentators such as Verplank “saw that if value is solely
determined by the clash of subjective desire, there can be no objective measure of the
fairness of a bargain”.28 Because contract only concerned the interests of the parties
involved, no other stakeholders could use the judicial system or otherwise interfere in
contractual relations. Consumer transactions were made private.
Will theory was a jurists theory: it originated in Roman, Christian and natural law
theories, and was modified by an Enlightenment led crisis of faith in Aristotelian based
concepts of equality in exchange.29 This was a modernist response to the bogeyman of
objective value.
However, it was rapidly accepted into English law and formed the
unifying conceptual basis for “classical contract theory”. Atiyah provides ample evidence
of the way the nineteenth century saw a new breed of lawyers and judges comfortable
with the free market ideals of David Ricardo and Adam Smith and sought to remold the
law of contracts as part of the centerpiece of a legal system structured around
contractual relationships. Will theory provided the tool to achieve these goals. Courts
could concern themselves only with the formal aspects of the contract such as formation,
and compliance with the contract terms. They would not need to enquire into whether
the substantive terms were fair or not. The effect of will theory was that it became the
natural ally of everyone with philosophical, political and economic theory that stressed
freedom of choice.
Contract law could enable commercial transactions without
interfering in how parties might want to structure their own affairs.
Patrick Atiyah notes that the classical law of contract embodied “the model of the
market”.30
The idea was to construct a formalized system, based on the ideals of
bargaining between free individuals, and the contract reflecting their mutual intentions.
The effect of acceptance of the will theory into classical contract law was the effective
adoption of a model of exchange transactions which brought new concepts of subjects
and exchange. For Atiyah, in such a model no man is his brother’s keeper: The parties
28
Horowitz, ibid. at page 225.
Gordley, ibid. at p. 82
30 Aityah, p. 403
29
10
bargain or negotiate and neither party owes any duty to volunteer information to the
other, nor is he entitled to rely on the other except within the narrowest possible limits.
Each party must study the situation, examine the subject-matter of the contract, and the
general market situation, assess the future probabilities, and rely on his own sources of
information.
The content of the contract--the terms, price and subject matter-- are
entirely for the parties to settle. It is assumed that the parties know their own minds, that
they are the best judges of their own needs and circumstances that they will calculate
the risks and future contingencies that are relevant, and that all these enter into the
bargain and finally, this bindingness is, in principle, a matter of pecuniary calculation.31
This provides in crystallized form an expression of the subject of exchange as
autonomous and calculating. It provides a picture of the mode of exchange as a one off
discrete transaction between autonomous individuals. The classical picture, although
self-described as formal, neutral and resting on basic principles, in fact embodies
particular concepts of the person and of exchange. Classical contract law sought to
embody a complete explanation of law in terms of basic principles of individual freedom
to bargain.
This formalistic analysis, however, contains within it a misplaced self-
understanding: It misses the degree to which it is in practice oriented towards specific
concepts of human well-being and flourishing.
The mere rigid application of formal
principles became biased towards those who would best flourish under them, and this
would often be those persons with relative bargaining power and strength, who were
capable of excelling in the rough and tumble world of competitive markets. The classical
picture was, in effect, more than just another name for a laissez-faire market; it provided
the legal ground rules and sanction for such a market.
The concept of the person utilized in the theory is that of an “individual”: “Classical
contract law represented a world of totally autonomous individuals free to transact on
any terms they wished and thereby to control their own destinies”.32 By construing a
sharp distinction between the interests of different persons, classical contracts presented
a normative world of individual self-reliance, and entitlement to enjoy benefits without an
obligation to share or sacrifice them to the interests of others.
31
Atiyah, at p. 413
Feinman, J. (1989). "The Significance of Contract Theory." Cincinnati Law Review 58: 1283 at
p. 1310
32
11
In this conception, choice stands at the centre of person. Classical contract law created
a world of private ordering where parties created their own laws by agreement. Liability
was imposed through consent, and this was grounded in the conception of a social world
as composed of independent freedom-seeking individuals.
“Freedom of contract is
grounded in the concept of choice. People should be free to choose which contracts they
will enter into, on what terms, and which contracts they will avoid”. 33 In the case of a
contract for employment there is no cause to second judge wage levels or working
conditions because these are assumed to have been freely negotiated by free and equal
individuals.
The will theory and classical contract created the exchange process as we are familiar
with it today. Because the bargaining process occurs between autonomous individuals, it
takes on a specific form, but also implies a certain conception of the persons involved.
Emile Durkheim, for instance, noted that “In the fact of exchange, the various agents
remain outside of each other, and when the business has been completed, each one
retires and is left entirely on his own”.34 Ian Macneil calls this the “discrete transaction”.35
More recently Michel Callon refers to a system of the “clean break” whereby the parties
momentarily meet and then are “quits”.36 In each case, the point is the same: the model
transaction involves an isolated one off event, between two relatively equally situated
arms-length bargainers, engaged with each other for the sole purpose of the contractual
exchange, and expressing their complete contractual obligations in their mutual
promises. ”Contract” is defined through the offer and acceptance rubric, where all the
parties’ obligations are objectified in the stated agreement. The result is that parties
relate to one another as “calculative agencies”.37
While the concept “consumer” would
not come into play until the twentieth century, we have the clear outlines here of the
basic model of the rational actor as found in micro-economics and which later becomes
the consumer.
33
Feinman, J. (1983). "Critical Approaches to Contract Law." UCLA Law Review 30: 829. citing
Holmes, O. (1881) The Common Law, W. Story (1844) A Treatise on the Law of Contracts Not
Under Seal
34 Quoted in MacNeil, Ian (1980) The New Social Contract. Yale University Press. At p. 95
35 MacNeil, ibid. at p. 2
36 Callon, M. (1998) "Introduction: The Embeddedness of Economic Markets in Economics." In
The Laws of the Markets, edited by Michel Callon, 1-57: Basic Blackwell/The Sociological
Review, 1998 at p. 17
37 Callon, ibid. p.19
12
The classical contract picture provides concepts of subjects and exchange that embody
a concept of commodity networks. The network is implicitly understood as composed of
different people who enter into contracts with one another, as free and equal legal
subjects, so the consumer engages with the network by way of contract, and is quits with
the network after the contract is fulfilled. A particular person need only relate to the
network in terms of pecuniary self-interest and need not have a particular idea of other
aspects of the network.
Self-interest is to be understood in terms of commodity
ownership itself—albeit in forms such as money or real or personal property. Because
relations are only with the next person over in the chain, there is no need for
considerations about effects on further parties or ecologies in the network to be brought
to bear on the exchange.
Thus far, I have been drawing on a series of works by twentieth century legal realist and
critical legal studies scholars that have taken an interest in understanding the law of
contracts as a social institution.38 Writer such as Atiyah, Horowitz, and Feinman were
concerned with problems of wealth distribution and the role of contracts and the courts in
supporting capitalist social relations in the nineteenth and twentieth century.
For
contemporary readers concerned about consumption and its social and environmental
effects, it remains important to understand consumer transactions as one type of
capitalist social relation. Consumption related concerns involve issues of how exchange
is part of global commodity networks that link consumers to distant other persons and
ecosystems. This brings additional concerns about the material flows and resources
usages of the economy.
Capitalist social relations depend on the transformation of
ecosystems and the non-human parts of the planet into commodities. The issue of
objects and their role in exchange is central to such an analysis.
In the classical contract law approach that developed in the nineteenth century trade
relations are structured and understood as part of the will of the parties—that is of
individuals—and this comes to bear upon the way objects are understood. The will
theory carries with it a sharp distinction between persons (persona) and things (res).
38
Realists who have made these critiques include Roscoe Pound and Karl Lewellyn. The tradition
is continued in the 1970s and 1980s by Patrick Atiyah, Morton Horowitz, Jay Feinman, Roberto
Unger and Duncan Kennedy among others.
13
Alain Pottage, writing about property law, notes that “the distinction between persons
and things is a foundational theme in Western society, and that legal institutions have
played an essential role in constituting and maintaining that distinction.”39 The concept
of will was historically linked in Roman, Christian and natural law to the persona, as
“subjectum juris”, “according to which legal rights… are the legal clothing of natural
individuals or a set of quasi-prosthetic forms that realize and articulate a subjective
will.”40
While initially a legal fiction the concept of persona hardened into a dead
metaphor and became a principle mode of self-understanding.
The person/thing
distinction both exemplifies and is productive of the modernist ideal whereby objects are
understood as dead or inert things, and subjects as exercising control and jurisdiction
over them.
The will theory, in rendering subjects intentions the sole ground of value,
results in a situation were “objects and relations have value only as individuals choose to
accord it to them in the marketplace.”41 By configuring objects as subject to the will of
their owner as obtained in exchange, the theory works to eviscerate the social lives and
prior history of goods.
The will theory was an academic theory found in new treatises, and it does not exactly
match all of contract practice.
English contract law has always included equitable
concepts and the idiosyncratic views of particular judges that make it hard to match the
theory with actual judicial decision-making. In what follows, the analysis shifts to case
law and commentary on it to see how the will theory and commercial practice worked to
forge legal concepts of objects and exchange.
This is most striking in the decisions
concerning the principle of “caveat emptor”. This principle holds that buyers must take
precautions in the market place and have no rights to information or to guarantees
concerning the goods they buy. The decisions of caveat emptor are one area where the
judges were willing to constrain the plurality of judicial practice to ensure a new uniform
approach to subjects, objects and exchange.
6.4 Caveat Emptor
Pottage, A. (2004) “Introduction: The Fabrication of Persons and Things” Law, Anthropology
and the Construction of the Social: Making Persons and things. Cambridge University Press.
Alain Pottage and Martha Mundy (eds.) at p. 4.
40 Pottage, A. (2001) “Persons and things: an ethnographic analogy” Economy and Society (30):1
p. 112-18 at p. 119
41 Feinman, (1983) ibid. at p. 839
39
14
Caveat emptor became in the nineteenth century, “the apotheosis of nineteenth century
individualism”.42 It was linked to the principles of liberal political economy by writers in
the early nineteenth century such as William Paley and J.R. McCulloch. They argued
that free competition in the marketplace was the best way to secure quality goods and
reasonable prices.43 The linking of caveat emptor to free markets, and the deregulation
of the English economy has lead a number of writers to identify caveat emptor with, as
Hamilton expresses it in his famous article, “the refusal of public authority, through
legislature and judiciary, to accord effective protection to the purchaser”.44
Horowitz
notes, citing the early nineteenth century critic Verplank, that caveat emptor represents
“the nineteenth century departure from the equitable conception of contract”.45 This
interpretation suggests that when the courts shifted away from caveat emptor in the
1850s and 1860s it represented the beginnings of intervention into the market.
An alternative view is that caveat emptor and laissez faire are not the same thing at all.
As Lewellyn explains: “the level of dealing (for purposes of dealers, and of civil suits),
can shift far toward caveat venditor, and has done so, without disturbing business, or
disturbing the unregulated character of business competition.”46
For Lewellyn, if the
social context changes such that commercial men and consumers come to expect
sellers to bear the risks for bad goods, then the courts can adopt these new customs
without imposing new forms of control on the market. On this view, when the courts
shifted to the view that sellers of goods implied that their wares were safe, this did not
represent significant forms of market intervention.47 Both approaches miss over the
ways cases concerning caveat emptor embodies more basic issues of nature of
persons, things, and exchange that the cases are debating.
The predominant debate in nineteenth century cases concerned the issue of how to
account for important aspects of goods that could not be found by the buyers’ inspection.
The courts were confronted with the difficulty that the market model provided no direct
42
Atiyah, at p.464
Paley, W. (1790) Principles of Moral and Political Philosophy, Book III, part 1 Chapter VII; J.R.
McCulloch , The Principles of Political Economy. Cited by Atiyah, at p. 467
44 Hamilton, W. (1931) “The Ancient Maxim Caveat Emptor” Yale Law Journal Vol. XL. No. 8, p.
1133
45 Horowitz, ibid. at p. 946
46 Lewellyn, K. On Warranty of Quality and Society (1936) 36 Columbia Law Review. 699
47 Lewellyn, ibid at p. 718
43
15
means for buyers to know about important background conditions for goods, but at the
same time the integrity of the market depended on this. The result was considerable
instability and conflict in the law as different judges took different positions. If a person
was buying a physical object then personal inspection would be paramount. However, if
a person was buying what was agreed between the parties, then the courts could the
buyer relied on the words of the seller: Whatever was handed over would need to
comply with the way the goods were described in the initial agreement, regardless of the
buyers’ inspection. A series of common law cases that underlie the shift from caveat
emptor to the Sales of Goods Act encapsulate this debate. Both conceptions squarely
construe transactions in the harsh commercial logic of self-interest and mutual promises.
A whole range of cases in the early nineteenth century involve the rigorous proclamation
of “caveat emptor”. In Parkinson v Lee (1802)48 there was a sale of hops (as in beer)
sold by “sample”—that is, the buyer could inspect some of the hops and then order more
“of like goodness and quality”. Six months after the initial inspection, the buyer received
hops from the seller’s warehouse. Unbeknownst to the seller, the hos came watered,
and then rotted. The extent of belief in caveat emptor can be gleaned from the plaintiff
buyer’s own argument (or his lawyers). He was willing to acknowledge that caveat
emptor applied in the context “where a defect is apparent on the face of a commodity;
there it may fairly be presumed that the buyer exercised his own judgment upon it; at
least it was his own fault if he did not”.49 The plaintiff’s lawyers were even willing to
concede that “Whatever natural defects or infirmities are incidental to the subject matter,
the buyer must take the risk of; such as those with which horses are afflicted,” (referring
to the common law tradition of caveat emptor in the sale of horses). Given the state of
the law, the plaintiff argues the narrow point that the commodity should answer the
sample. The plaintiff invoked the earlier fair price doctrine, arguing that as a fair price
was paid, the commodity should be in a merchantable condition at the time of the sale.
Otherwise the buyer might receive a different thing from that which he stipulated for, and
which it was the understanding of both parties that he should have. The defendant
argued that every person entering into a contract in the course of trade is presumed to
have a competent skill to enable him to judge of the commodity he bargains for. He
knows the defects to which it is liable as well from fraud as from natural causes, and he
48
49
2 East 314, 102 E.R. 389
102 E.R. at 391
16
speculates accordingly. The court bought this argument. Judge Gross ruled that: “It is
the fault of the buyer that he did not insist on a warranty”.50 Judge Lawrence: “I must
suppose that each party was equally well acquainted with the commodity bargained
for…. the plaintiff might, if he pleased, have provided against the risk”.51
Parkinson v. Lee was just one of many cases that upheld caveat emptor in cases of
inspection. In Shepherd v Pybus (1841)52 a builder sold a new barge from his wharf.
Relief was denied to the plaintiff who after taking possession found the barge to be leaky
and in bad shape, on the basis that he had had opportunity to inspect the barge on his
own. In Emmerton v Mathews (1862)
53
the courts okayed the sale of meat found to be
unfit for human food on the basis that the buyer had inspected. As late as Smith v.
Hughes (1871) the courts upheld a contract for oats different from what the buyer said
he wanted on the basis that he had inspected a sample of what was provided. Lord
Blackburn commented that “there is no legal obligation on the vendor to inform the
purchaser that he is under a mistake which has not been induced by the act of the
vendor.”54
We see in Parkinson v. Lee and these further cases the idea that the objects of
exchange begins as things for which a physical inspection could almost completely
provide an accurate analysis. The courts emphasize that the buyer can inspect the
article and depend on his own judgment. This is the domain of what Llewellyn has
coined “primitive-mercantile”—the domain of “on the spot horse trading” and country
vegetable markets. We have, then, a reference to the ideal of the physical marketplace,
where goods are handled and seen and the rational agent, self-sufficient in making
50
at 2-East-322.
At 2 East 323
52 3 Manning and Granger 868, 133 E.R. 1290
53 7 Hurlstone and Norman 586, 158 ER 604
54 At para. 10. see also Burnby v Bollett (1847)16 Meeson and Welsby 644, 153 ER 1348.
Farmer buys dead pig from another farmer. Turns out putrid. Caveat emptor when the defendant
is not in the business or trade. This same faith in judgment and first hand inspection also explains
the “patent exclusion clause” in the Sale of Goods Act (1893). Chalmers, the author of the Act,
directly references two cases: Chanter v. Hopkins (1838) 4 M and W. 399 and Olliviant by Bayley
(1843). 4 M and W. 399. Chanter involved a patented apparatus for a “smoke-consuming
furnace” to help in making beer. “The [seller] had performed his part of the contract by sending
that machine; and it is the [buyers] concern whether it answers the purpose for which he wanted
to use it, or not.” So the fact that the object is an “ascertained article” means that there is no
particular fitness for purpose. This reasoning is extended in Ollivant v. Bailey: because
something patented is an “ascertained article” then the issue of fitness of purpose does not arise.
51
17
judgments, and the things traded as mere objects. This reflects the idea we see in
Blackstone who talks of property in chattels (personal property such as consumer
goods) as over “things which could be detected by the senses”.55
The emphasis on visual inspection works to construe goods in terms of their physical
and phenomenal features. The approach sees the objects of consumer transactions as
“things”. There is no way that process features could ever form part of consumers’
decision unless these were independently stipulated by the parties. While a buyer can
make inquiries, sellers may well not provide answers. The effect of the competitive
market may be that sellers are not likely to provide answers and are likely to not have
made any inquiries themselves. It could be expected that no answers would be
forthcoming. We have here an historical instance of the process product distinction
whereby things on the market are understood in terms of their physical features alone
and buyers are given no rights to know about origins.56 In the case of latent defects,
where inspection would not show the problem, consumers would have to take their
chances. Any actual reliance that consumers vested in sellers that was not protected by
an express warranty was not legally protected. This was such an obvious hole in the
theory that it would have to give way to a different approach that could accommodate
latent defects.
Caveat emptor helps ensure that goods become “disentangled”. As Michel Callon writes
“To construct a market transaction, that is to say to transform something into a
commodity, it is necessary to cut the ties between this thing and other objects or human
beings one by one. It must be decontextualised, dissociated and detached.”57
The
concept of disentanglement helps show how subjects, objects and exchange become
assembled together. For Callon, disentanglement follows from the “clean break and
55Blackstone
Commentaries 2 at 17. See also See, also, for the thing view of property
Vandevelde, G. (1980) “The New Property of the 19th Century: The Development of the Modern
Concept of Property” Buffalo L. Rev. 29: 325
56 For contemporary discussion of this distinction see Kysar, D. (2004). “Preferences for
Processes: The Process/Product Distinction and the Regulation of Consumer Choice” Harv. L.
Rev. Col 118, No. 2 525-640
57 , M. (1998). Introduction: The embeddedness of economic markets in economics. The Laws of
the Markets. M. Callon, Basic Blackwell/The Sociological Review: 1-57 at p. 18 see also . Callon,
M. (1998). “An Essay on framing and overflowing: economic externalities revisited by sociology”.
The Laws of the Markets. M. Callon, Basil Blackwell and The Sociological Review; Callon, M.
(1999). Actor-network theory--the market test. Actor Network Theory and after. J. L. a. J.
Hassard. London, Blackwell.
18
then quits” idea of the discrete transaction. What makes the transaction discrete is that
each party gets a bundled-thing, and does not become enmeshed in further series of
social relations. In gift exchanges when one gives another person a gift, the recipient
becomes obligated in some ways to return the gift. There is a kind of debt to be repaid:
“If the thing remains entangled, the one who receive it is never quits”.
The constitution of exchange relationships in terms of the disentangled conception
requires removing the various bonds of social relationship and interdependencies which
usually accompany human association. In order to allow market relationships to be
discrete, the persons must be disentangled and this requires that the things be removed
from their background. All this is implicit in the idea of the exchange of property as “free
alienation”. One severs the thing from its past and delivers a new object, without legal
(or evaluative, moral, emotional, or other) bonds to the buyer: “The alienation of a thing
is its dissociation from producers, former users, or prior context”.58 There is a two way
relationship between the concept of discrete exchange and the concept of disentangled
objects. The fact that things are seen as objects allows for disentanglement, and the
fact that discrete contracting requires disentanglement works to turn things into
objects.59
Likewise, the autonomous individual is made autonomous through the configuration of
exchange relationships as discrete; simultaneously relations are only discrete because
individuals are always operating at arm’s length from one another. For persons who
58
Thomas, N. (1991) Entangled Objects. Exchange, Material Culture and Colonialism in the
Pacific. Harvard University Press. Citied in Callon, 1998, at p.20
59 The thing theory has more recently been advocated as “in rem theory”. The initial formulation is in
Hohfield, W.H. (1913) “Some Fundamental Legal Conceptions as Applied in Judicial Reasoning ‘ (1913)
26 Yale Law Journal 16, and “Some Fundamental Conceptions as Applied in Judicial Reasoning ‘ (1917)
26 Yale Law Journal 710. “Hofeldian In Rem Theory” has been recently developed in Merril, T. and Smith,
H. “What Happened to Property in Law and Economics? 111Yale L. J. 357 (2001); Merril, T. and Smith, H.
(2001) “the Property-Contract Interface, 101 Colum. L. Rev. 773; Merril, T. and Smith, H. (2000), Optimal
Standardization in the Law of Property: the Numerus Clausus Principle 110 Yale L. J. 1 9. Merrill and
Smith distinguish property from contract (and feel that law and economics misses this). Contracts involve
only a small number of persons who can actually work out the terms of the deal, and for that reason
contracts can be quite complicated. And the contract is all over when the immediate participants finish
with it. Property, on the other hand, can easily survive its current owners. A given piece of property may be
bought and sold over and over, and the more durable the goods, the more times those goods will show up in
the market. So property’s legal consequences attach to the thing ( in rem) as opposed to the persons
involved. The theory notes that property has to be kept simple, so that new generations of owners have a
good idea about what they are getting, and so that current buyers and sellers do not need to search out
extensive relationships that might affect their purchase—exactly Callon’s point.
19
already see themselves as autonomous individuals, disentanglement enables the
perpetuation of that self-understanding and way of being.
The more traditional reading of caveat emptor is that the concern for individualized
judgment had to do with the need for an easy resolution to problems of consumer
protection in a deregulated market. What the courts were doing was providing a system
for private vigilance, alerting potential victims to danger. Caveat emptor, on this reading
is a kind of utterance that hails the consumer with its literal meaning—Buyer, Beware!—
and so stimulate buyers to take all kinds of precautions against uncommunicative
sellers.
A sufficiently vigilant public could then ensure that shoddy goods would
disappear from the market, without the need for legislation or litigation.60 If buyers knew
there was a possibility of a legal remedy to save them, they might become sloppy in
inspecting goods. The result would be more frauds than under caveat emptor.61 This
reading reinforces rather than undermines the idea of the new contract law as designing
an individualized practice of exchange.
Here the courts are using their power to
emphasize the importance of individual judgment, to insist that consumers become
accustomed to act in just the ways that the market ideal insists. The use of this warning
presupposes the “thing” idea of the market and the self-interest model of the consumer.
Here we have clear commands from the judiciary that the person should take on the
market ideal of subjectivity, and become the legal subject of commercial exchange. “Not
until the nineteenth century did judges discover that caveat emptor sharpened wits,
taught self-reliance, made a man-- an economic man—out of the buyer, and served well
its two masters, business and justice”.62
Arjun Appadurai has noted that objects are not always commodities, in the sense that
they can pass into different uses at different times: we relate to a purchased product
very differently than to something we find in a forest, but the purchase may in fact have
60
Atiyah, at page at p. 465, citing the Second Report of the Mercantile Law Commission (185455). The technique proved to be failure: Reports of the conditions in which most English people
lived in the early nineteenth century show remarkable levels of impoverishment and lack of
protection in the marketplace. Bread adulterated with chalk was widely prevalent. Marx, Karl
(1976) Capital. Volume 1. Penguin. at p. 278, n 14.citing Report of the Select Committee on the
Adulteration of Food 1855, and Dr. Hassal’s Adulterations Detected, 2nd ed.. London 1861. also
Thompson, ibid. at p. 874.
61 Mentioned in Kennedy, D. (1976) "Form and Substance in Private Law Adjudication." Harvard
Law Review 89 (1975-1976): 1655 at p.1695 citing Kessler, F. (1964) “The protection of the
consumer under Modern sales law, part 1” Yale Law Journal. 74: 262
62 Hamilton, ibid. at p. 1186
20
once have been found by chance and cherished as such. Hence, we should speak of a
“commodity situation” in the social life of an object as “the situation in which its
exchangeability (past, present, or future) for some other thing is its socially relevant
feature”.63 It would follow that the conceptual framework surrounding exchange works to
reinscribe the thing as a commodity. Caveat emptor works to perform things as things
as shoppers are enjoined by judges to take caution.
There is an ideological aspect to this: The “thing” concept reinforces the notion of the
autonomous individual by disentangling the consumption of objects from social bonds. It
can be understood as part of complex discourses that emerge to help normalize and
justify the existing social order and ease the consumers’ soul. In the early nineteenth
century most consumers would have had little knowledge of the working conditions in
distant tea plantations but they certainly experienced first hand local factory conditions,
which included fourteen to sixteen hour days for pre-adolescent children.64 Prominent
social movements sought to change those conditions. This included popular agitation for
labour legislation such as in the “Ten Hours” or “Factory Movement” which pressed for
the labour rights of working children and adults.65 It also included later efforts such as
William Morris’ arts and crafts movement, which attempted integrated reform of the
design of products as well as humanizing the ways in which they were made.66 There
were strong motivations for the consuming classes to deny their daily complicity in such
hardship and seeing consumer goods as products rather than processes helps in this
regard. Laissez-faire, caveat emptor and disentangled subjects and objects co-existed
in an assemblage formation.
Legislation
Laissez-faire values were prominent in England’s Parliament in the first half of the
nineteenth century
Nevertheless, Parliament did continue some legislative provisions
relating to consumer issues.
The new construal of contracts implied a particular
Appadurai, A. (2005) “Commodities and the Politics of Value” Rethinking Commodification. Ed.
Martha Ertman and Joan Williams. New York University Press. At p. 37
64 Thompson, E.P. (1980) The History of the English Working Class. Penguin. [1963] at p. 373
65 Thompson, ibid. at p. 371-84
66Foster, J. (1994) The Vulnerable Planet: A Short Economic History of the Environment Monthly
Review Press. at p. 67, Kimmel, Michael S. “The Arts and Crafts Movement: Handmade
Socialism or Elite Consumerism? Contemporary Sociology Vol. 16 No. 3 (May 1987) 388-390.
63
21
understanding of the relationship of exchange to government regulation which continues
to have force to the present.
The English state was increasingly under pressure to respond to specific problems such
as the mistreatment of emigrants (hence the Passenger Acts), cholera epidemics (hence
the Nuisance Removal Act (1848)) or food adulteration. In many cases the “legislation
was largely dictated by the shear force of events” rather than philosophical principles.” 67
In England and its colonies there was no explicit constitutional right to freedom of
contract, and the liberal politics of Jeremy Bentham and John Stuart Mill acknowledged
a role for government involvement in the economy. Contractual freedoms fell out of the
property and contract system, and the absence of laws restricting commerce. There
were laws concerning adulteration of food, including those to prevent adulteration of tea
(1730, 1777), to prevent burnt vegetable matter from being mixed with coffee beans
(statutes of 1718, 1724 and 1803) to prevent the suppression of alum in bread (1758,
1822, and 1836) and for beer (1761, 1816, and 1819). Once techniques of microscopic
analysis became available in the 1850s, more aggressive and effective legislation for
adulteration of food could be passed.68 Weights and measures legislation was passed
from 1795 through to 1859, providing for inspectors to enter shops, examine weights
and certify them as accurate, and to create standardization across the country.
In
possible response to the caveat emptor principles of Parkinson v. Lee Parliament
passed the Hop Trade Acts, in 1808, and 1814, designed to identify the names and
addresses of hop growers on bags, with the hope of avoiding fraud in the sale of hops.
The 1866 Act noted that the previous ones had been ineffectual, and sought to
specifically prohibit the mixing of different qualities so that a sample might not truly
match the bulk.
Parliament was more willing than the courts to acknowledge the
deficiencies of caveat emptor.
Other legislative provisions impacted more seriously on traditional realms of contract.
The mid nineteenth century saw the emergence of laws limiting first the hours of child
labourers (The Factories Act 1833) and then restrictions on the hours of work of all
workers (Factories Act 1853).69 The first Alkali Act in 1863 paved the way for a modest
67
Atiyah, at p. 555
Atiyah, at p. 546-7
69 Atiyah, p. 539-40
68
22
environmental and administrative system for dealing with industrial pollution. It acted as
a template for central state regulation of pollution” that continues to the present.70 We
can trace the ways employment laws might change the way commodities are produced,
or how food adulteration laws might improve the quality of food, and these do represent
changes to commodity networks and the objects of exchange. The limited powers of the
administrative state did provide for minor processes of re-entanglement of goods
although initially in terms of relationships between producers, vendors and the state,
rather than any thickening of ties between persons.
The effect of the will theory was that once the bureaucratic state began to introduce
legislation in the nineteenth and early twentieth century reformers saw this not as
cohering with, but as a justifiable interference with the autonomous and coherent body of
private law.
71
When the state came to impose workplace laws—governing maximum
hours and minimum pay—these ceased to be conceived of as contract laws, but rather a
removal of an arena from the realm of contract into a realm of legislative control.
Commercial activity, including consumer transactions, were insulated in a zone of
privacy and construed as free from the substantive constraints on contract activity found
in public regimes such as employment law. The result was a conceptual separation of
economics and politics, of private and public activities.72
Where no public laws
interfered, parties were free to engage in contract without concern as to substantive
requirements.
Critical legal scholars have made much of the ways in which the division of public and
private has contributed to a naturalization of modes of economic ordering.
This
contributes to a refusal of the liberal state or courts to challenge such modes, both in
failing to recognize the political dimensions of contract activity, including consumption,
and in shifting political discourse away from regulation of the economy.73 However, the
administrative state even in the mid nineteenth century did feature regulations, laws, and
policies that changed the face of contracting behaviour: The public-private distinction
then, as it is now, was more a feature of liberal politics and economic theorizing than a
70
Coyle and Morrow, ibid. p. 136
Gordley, ibid. at p. 85
72 Cutler, C (2003) Private Power and Global Authority. Cambridge University Press at p. 161)
73 Cutler, C. ibid. at p. 1781Petter, A. and Hutchinson, A.(1988) ” Private Rights and Public
Wrongs” University of Toronto Law Journal (33) 3; Horwitz, J. (1982) “The History of the
Public/Private Distinction” 130 U. Pa. L.R. 1423 a5 1426
71
23
reflection of any sharp rules undergirding actual government practice concerning
consumption.
The market ideal operated as a guiding force in Parliament, and when it
was used, as it often was, it was to leave issues of governance to contract and private
ordering.
Caveat Emptor and Title
The thing theory was never a very good theory, but rather the effect of the judges’
attempts to maintain individualism, faith in individual choice and disentanglement. The
theory was unstable because it meant blocking out obvious aspects of goods not
discernible by inspection. The case of title to goods has always illustrated the limits to
which courts are willing to accept visual inspection alone. Title concerns aspects of the
“world behind the product”. It’s a central part of the business of courts to maintain the
system of private property, and preserving property potentially comes into conflict with
the free circulation of goods. If caveat emptor were truly the rule, individual buyers
would have no basis to know whether, when paying for a good, they were also obtaining
the right to have the good. In traditional law of personal property the rule in the common
law has always been that a seller can only sell as good title as he has, so if a buyer pays
for stolen goods he or she risks those goods being reclaimed by the original owners. No
amount of inspection can help the buyer in this regard. So if the system is to be
designed to protect property rights of both sellers and buyers, some provision is needed
beyond simple declarations that buyer beware unless purchasers are to seek out the
histories of each thing they buy. The entire framework of markets in England made such
an approach impossible, Middle men, shippers and merchants would sell wares on the
streets with potentially mysterious originations. Whereas trade wants disentanglement,
property seeks reentanglement.74 Concerns about property foreshadow many future
concerns about the hidden life of goods such as ecological concerns about process.
74
Holman v. Johnson [1775-1802] ALL E.R. Rep. 98; 1 Cowp. 341; 98 E.R. 1120 represents an
extreme case of Judge Mansfield’s attempt to disentangle the tea trade. The British government
in the eighteenth century retained large custom tariffs on tea, with the result that most tea in
England was smuggled (Fruits of Empire, p. 109). In Holman Mansfield upholds a contract, made
in France, in which both parties knew the purpose was to smuggle tea. His reasoning is that
there was nothing illegal in the contract. Unfortunately for tea smugglers legality also breeds
entanglement, hence the case remains an anomaly. See, Gedge and others v. Royal Exchange
Assurance Corporation [1900-03] ALL E.R. Rep. 179; Foster v. Driscoll, Lindsay v. Attfield,
Lindsay v. Driscoll, [1928] All E.R. Rep. 130.
24
The tradition in London of market overt represents probably the most pro-market solution
available. Market overt was a particular kind of market whereby so long as goods were
openly displayed, buyers for fair market value could always take good title. The market
overt represents a kind of victory for the forces of free circulation. Buyers are freed of the
need to inquire as to the origination of the goods, and sellers need not ask too many
questions of their suppliers, nor worry as to what to say to customers.
So it created a
climate of unconcern over the history of products. The problem is that the system runs
roughshod over the property rights of those who have been robbed or defrauded of their
goods—they are asked to patrol markets themselves as their only security. Efforts in the
twentieth century in England have been to limit the institution.75 In British Columbia
which by historical contingency adopted the market overt rules, the courts have ruled
that there are no such markets in the province.76
Outside of London, where property rules would still matter to the buyer, buyers could
always make a point of asking the seller whether the goods came with good title, and a
positive response would then take the form of a warranty concerning the goods that
would bind the seller. In Crosse. v. Gardner (1688) the Chief Justice Sir John Holtd
acknowledges that the mere affirmation that oxen properly belonged to the seller gave
the buyer a right of action. At common law, if the vendor knew that he had no title and
concealed that fact, he was held responsible to the purchaser for a fraud or deceit.77 If
the vendor was mistaken the risk fell on the buyer rather than on the seller. However, in
the title case, silence was tantamount to an affirmation by the seller that she has title.
Caveat emptor only applied, then, concerning the possibility that the seller is innocently
(or perhaps negligently) mistaken.
75
Attempts at judicial limitation gain speed in the early 20th C: see Clayton v. Le Roy [1911-1913]
ALL E.R. Rep. 284, [1911] 2 K.B. 1031—In the court of appeal Moulton notes that market overt is
“unique custom and one which does not seem to me to be very much in keeping with modern
ideas, and it certainly is not a custom which is likely to receive any further judicial extension” See
also Secretary of State for War v. Wynne and others [1904] All ER Rep. 352, [1905] 2 KB 545
(Market overt protection to bona fide purchasers does not apply to Crown Property).
76 British Columbia is the only Canadian province to have rules concerning market overt. Fridman
.G.H.L. Sales of Goods in Canada, 4th Edition. Carswell. 1995 at page 146-7. The courts have
ruled that there are no market overt in the province. Westcoast Leasing Ltd. v. Westcoast
Communications Ltd. (1980) 22 B.C.L.R. 285 (B.C.S.C.) at 291.
77 deceit (See Coke .Ltt. 102, a, ad 3 Co. rep. 22a ; Sprigwell v. Allen (1)
Early v. Garet and Wiliamson v. Allison.
25
The courts did at times apply caveat emptor in matters of title.78 The limited application
of caveat emptor in title cases can be seen in the case of Morley v. Attenborough
(1849).79 In this case there was a a harp that kept changing hands. First a lease, then a
lessee that leaves it at a pawnbroker, a pawnbroker who sells it at auction and a new
buyer who loses it to the original owner for want of title. The new buyer sues the
pawnbroker. The problem is, he never got a warranty of title. Parke, the presiding
judge, argues that there is “by the law of England no warranty of title in the actual
contract of sale any more than there is of quality. The rule of caveat emptor applies to
both.”80 The strange thing about the case is that the judge declares caveat emptor, but
only after listing all the cases it does not apply to regarding title. Not where there is an
executory contract-- no court or reasonable person would see a purchaser as bound by
a contract if he were to discover defects as to title before receipt of the goods, or if, after
receipt the goods were recovered from him. Not if bought in a shop: A shopkeeper
impliedly warrants good title. Parke insists that caveat emptor applies but in the very
narrow case of a sale by auction by a pawnbroker. All that is implied is that there is a
pledge and that the pawnbroker is not aware of any defects. Caveat emptor continued
to hold great ideological weight, but by the 1860s the common law courts came to adopt
the idea already found in Roman and civil law, that the vendor implies a warranty that he
has the right to dispose of the objects which he sells.81
From Caveat Emptor to Implied Terms
Throughout most of the nineteenth century there is no clear differentiation of Sale of
Goods from contract law in general.
The appeal of caveat emptor at the Court of
Exchequer and King’s Bench may well have been attributable to the desire to maintain a
consistent body of contract law through all areas.
It was becoming increasingly
questioned by political economists such as John Stuart Mill, and later even Herbert
Spencer whether consumers should be left entirely to their own devices concerning
potentially dangerous goods.82 In effect, this was a crisis in the “thing theory”. The courts
78
Allen v. Hopkins. (1844) 13 M. & W. 94, 153 E.R. 39
[1843-60] All E.R. Rep. 1045 3 Exch. 500, 154 E.R. 942
80 At paragraph 3
81 Eicholz v. Bannister (1864) 17 CBNS 708, 144 ER 284
82 Atiyah, at p. 470
79
26
did change the law on a case by case basis and by 1893 Judge Chalmers was able to
codify a distinct realm of common law cases into the Sale of Goods Act. This new area
would still rest on contracts law concerning the formation of agreements and issues
concerning damages but embody new ideas of exchange and its objects.
In the first transformation courts retain an insistence on individual judgment but also
allow, in some limited contexts, that contracts come with implied terms. In Gardiner v
Gray (1815)83 the defendant sold twelve bags of waste silk which on its arrival was found
to be of a quality not saleable “under the denomination of ‘waste silk’”.
Lord
Ellenborough: "The purchaser has a right to expect a saleable article, answering the
description in the contract”.
For Ellenborough this follows, not from any explicit
reference to concepts of fairness, but from the way he read the terms of the contract. He
says “the intention of both parties must be taken to be, that it shall be saleable in the
market under the denomination mentioned in the contract between them." So here we
have the first introduction of the concept that the description of goods in the contract can
help resolve contract disputes. The contract was read to include an implied term. It was
implied that the contract in performance should accord with the promises given. A
contract made amongst commercial men presupposes that the goods can be further sold
down the line. In Jones v Bright (1829)84 there was an “executory” contract in which a
written agreement was for a shipper to purchase, directly from the manufacturer, copper
sheathing for commercial navigation ships. The buyer received bad goods and sued in
court for the money spent. The court held that here the buyer relied on the word of the
seller and manufacturer. According to the court, it was impossible that the buyer should
be able to ascertain beforehand whether the article will answer the purpose for which it
is destined. In Brown v. Edington (1841)85 a manufacturer who sold a special rope for a
warehouse was found liable after it proved too weak to lift and move crates. The court
held that if the buyer relies on the seller and states the purpose for a good then the
transaction implies that the good will be fit and proper for that purpose. In each of these
cases the court is careful to insist that ”if a party purchases an article upon his own
judgment, he cannot afterward hold the vendor responsible”.86 On the one hand the
83
4 Campb. 144,
5 Bingham 533, 130 ER 1167
85 2 Manning and Granger 279, 133 E.R. 751.
86 133. E.R. at p. 763
84
27
courts are beginning to accept implied terms, but they are also refusing to budge from
the idea that individual judgment is paramount.
In the second transformation we witness in Sales is towards description. Mody v.
Gregson (1868) provides the key transformation.
87
The Plaintiff bought 2500 pieces of
grey shirting. When the goods arrived they were no good. He sued, alleging a breach of
contract on the basis that the goods were not of merchantable quality. In Mody the
plaintiff argued that the contract carried an implied warranty as to merchantability:
Because the defect was latent, it could not be ascertained. Mody featured the distance
shipping of textiles-- shirting sent to Calcutta and orders taken and communicated at
long distances. When the plaintiff received the goods in Calcutta he discovered that the
defendant had put clay into the manufacturing process. The agreed upon weight had
been met, but only by destroying the shirts.
In the earlier line of cases, when a buyer of goods could not make a direct inspection of
goods, the courts were ready to acknowledge that a bargain was made on the basis of
descriptions of the goods. This still gave primacy to direct inspection. Here we have a
reversal: For goods bought under a specified commercial description “it is an implied
term, notwithstanding the sample or inspection, that the goods shall reasonably answer
the special description in its commercial sense.” (Italics added). The sample no longer
serves as the basis for judgment. Rather, it is the “mere expression of the quality of the
article, not of its essential character”. The description is first, and the sample is only to
help realize that description. What mattered was simply whether the bulk matched the
description. “The parties are dealing, not for the mere semblance or shadow of the thing
designated, but for the thing itself as commonly understood in commerce, with the
essential qualities which make it worth buying, to a person who wants an article of that
designation”.88
This was an immense improvement, allowing the courts to consider the role of latent
defects. It also led to the new technique of ascription of purposes. In Randall v. Newson
(1877)89 the new doctrine was used in a case involving personal injury. A faulty pole
87
19 L.T. 459 (Exch. Chamber),
p. 460
89 36 L.T. 162, 2 QBD 102 (C.A.)
88
28
(axle) on a carriage gave rise to legal action in contract. It was “a pole to be purchased
for a specific purpose”. The court ruled that the issue was whether the commodity
answers the description of it in the contract, and “it does not do so more or less, because
the defect in it is patent or latent or discoverable”.90 In that same year the case of Beer
v. Walker
91
found an implied warranty as to merchantability on food (specifically rabbit
meat). The House of Lords solidified the cause in Drummond v. Van Ingen (1887).92
Cloth manufacturers and merchants, dealing across the North Atlantic from Bradford to
New York ran into problems with latent defects in corkscrew twill for coats.
Lord
Herschel acknowledged “it is true that the purpose for which the goods were required
was not… stated in express terms, but was indicated by the very designation of the
goods, ‘coatings’” The sample, therefore, could achieve no more than express words.
Chalmers then simply included this principle into the 1893 Sale of Goods Act. He took
himself to be codifying existing case law, and not making new law. As a codification of
pre-existing contract law, the Act includes the developments concerning implied terms,
and also restates that the exchange of goods is by contract. The Sale of Goods Act still
provided that in the circumstance of an actual inspection, where defects were patent, the
fact of inspection would mean that there was no implied term. But this was now a rare
exception, a hold over from previous cases. Chalmers included these out of deference
to the common law tradition of accepting older cases if not explicitly overruled. 93 In such
cases the buyer’s having inspected and then bought the goods could be understood as
an acceptance of their condition.
After the passage of the Act and its spread through the colonies, the courts become
increasingly willing to ascribe a purpose to objects, in cases where this had not been
discussed or otherwise made known by the parties. For instance in Frost v. Aylesbury
Dairy Co. (1905)94 we have a case of the delivery of bad milk. In ruling that there was an
implied warranty because the company issued pamphlets saying their milk was healthy,
the Court of Appeal notes that "I do not suppose that anybody in his senses would
90
36 L.T. at p.166
[1874-80] ALL E.R. Rep. 1139, 37 L.T. 278
92 CC 284, 57 L.T. 1 (H.L.
93 To date cases hold that even where goods are seen by the buyer they may be the subject of a
contract of sale by description. See e.g. Wren v. Holt [1903] 1 K.B. 610 (C.A.); Morelli v. Fitch
[1928] 2 K.B. 636, Grant v. Australian Knitting Mills [1936] A.C. 85 at 100 (P.C.). Daniels &
Daniels v. White & Sons Ltd. [1938] 4 All E.R. 258. Other cases hold that even where specific
goods are being sold, the sale may be one by description. Verly v. Whipp [1900] Q.B. 513.
94 [1904-07] All E.R. Rep. 132, 92 L.T. 527 (C.A)
91
29
question for a moment that the purpose for which the milk was bought by the family was
for consumption as an article of food”.
The court now bypasses any reference to the
intentions of the parties and infers a purpose to goods from the context alone. The
result is that goods are interpreted by courts as coming with purposes. Subsequently,
courts rule that Coca-Cola is for drinking,95 and that mobile homes are for travel from
place to place.96 While technically the law requires that the seller rely on the buyer as to
the quality of the goods, the courts increasingly adopt a liberal interpretation of when
reliance can be inferred from the circumstances.97
Objects of exchange are now objects of utility—merchantable or filled with purposes, not
because of any inherent attributes, but because they match their description. The courts
would freely implying terms, but this depended on the the consumer transaction being
conceived as a language based agreement. The conceptual structure of an agreement
planned for the future (an executory contract) whereby the buyer trusts that the goods
will match the description, became the model for even simultaneous transactions. This
parallels the general developments in property in the nineteenth century. Rather than
physical stuff, increasingly personal property came to include various more abstract
things which had value, such as financial instruments or intellectual property. The result
was a process of “dephysicalization”.98 The thing becomes transformed—not as a mere
object available for inspection—but as whatever is specified by the parties, meaning, for
the most part, the object of a description in an order form or bureaucratic arrangement.
The commodity is no longer the thing as it appears for sale in the public square, but “the
thing itself as commonly understood in commerce”. The ways in which sophisticated
businessmen carried on their work became the model for consumer transactions.
Conclusion
95
Yelland v. National Café [1955] 5 DLR 560 (Sask. C.A.)
Marshall v.. Ryan ltd. [1922] E.R. 45
97 see, for example, Manchester Liners, Ltd. v. Rea, Ltd.[1922] ALL E.R. Rep. 605*Also reported
[1922] 2 A.C. 74 (H.L.) where Lord Sumner explains that “reliance is a matter of reasonable
inference to the seller and to the court”.
98 Vandevelde, ibid.
96
30
Nineteenth century contract and Sale of Goods provided a way of thinking about
persons, exchange and commodities which helped to facilitate commodity networks. Key
to this process was a set of interlocking concepts of subjects, objects, and exchange
which the law attempted to stabilize. The circulation of commodities was enabled
through concepts of exchange which hid the realities of networks from the persons who
participated in and so perpetrated them. In order to achieve this, the courts had to
conceive of objects in ways that kept them disentangled from historical and social
relations.
The result was at first a concept of these objects as things, and then a
concept of these objects that was mediated by the concept of description.
This
maintained a set of exchange relationships structured around autonomous individuals,
profit maximization, and lack of concern for the effects of contracting and its links to
other persons and ecosystems. The re-ordering of contract effaced the prior history of
consumption as embedded in social contexts and moral relations.
While a number of cases in Sales of Goods emphasize the role of trust, the adoption of
the functional analysis does not represent the re-entanglement of goods. In so far as a
person relies on the abilities or word of another, that other begins to be understood as
having duties towards those with whom they deal.99 This suggests a reading of Sale of
Goods as incorporating an underlying view of exchange relations in terms of social
embeddedness, of recognizing the way a range of social values, including trust,
underpin exchange relations as social phenomena.100 Atiyah argues that implied terms
reinstates an effective acknowledgment that there are elements of reliance in contracts
for goods.101 We need to be cautious about overstating the degree to which the
functional analysis re-embeds exchange into an ethical context.
The whole idea of
caveat emptor can be understood as an extreme swing towards one side of a pendulum
Drummond v. Van Ingen ibid. per Herschel: “the merchant trusts to the skill of the
manufacturer, and is entitled to trust to it…” Hyman .v Nye (1881) [1881-85] All ER. Rep. 183, 44
LT 919. Where a hired carriage breaks, spills and harms the plaintiff , an action in personal
injury and negligence is available on the basis that “there is no distinction in this respect between
contracts for sale and for the hire of an article for a specific purpose, where trust is reposed in the
person who, in the ordinary course of business, sells or lets to hire”. John MacDonald & Co. v.
Princess Manufacturing Co. [1925] O.J. No. 148 (C.A.) at para. 37 “ These particular classes are
held to give an implied warranty against latent defects, notwithstanding opportunity of inspection
of bulk or sample, because the purchaser trusts to their information, skill, and judgment, and is
entitled so to trust.”
100 This would then mirror an analogous move in economic sociology see, for instance,
Granovetter, M.S (1985) “Economic Action and Social Structure: the Problem of Embeddedness”
American Journal of Sociology (81) 3, 481-50—
101 Atiyah, at p. 475
99
31
oscillating between relationally conceived, or alternatively discrete and, individualistic
notions of exchange. Caveat emptor represented a reconstitution of exchange relations
in terms of a sparsely framed conception: Over time we see the courts and legislatures
slowly adding connections one by one.
The description account and the functional
account thus represent minor re-entanglements, but only as explicitly provided in terms
of implied warranties as to purpose and merchantability. Later in the twentieth century
we would see relations of duties of care concerning health and safety features of
products as between manufacturers and consumers, and a strengthening of health and
safety features of products. Here again, the range of trust, reliance or dependency only
concerns a limited domain.
For contemporary readers concerned with environmental or social justice concerns, the
narrow range of trust concerned with the gap between description and the goods
received hardly reconstitutes a world of social relations around goods tied to social and
ecological ties. Disentangled goods are part of a distinct morality of self-determination,
individual responsibility and competitive striving in the marketplace. The addition of
concepts of trust for latent defects does not swing the pendulum very far towards the
opposite pole. Sale of Goods law clearly fits into the contract law tradition. In terms of
the possible ways in which goods can be re-entangled, even twentieth century consumer
protection legislation, and negligence law simply represented adding a limited number of
new ties, restricted to the axes of health, safety and financial protections for consumers.
The limited environmental and workplace regulations which applied to some goods,
depended in large part on where they were made, and so increasingly came to apply to
only a subset of available goods on the market. Courts and legislators came to see that
the myth of formal equality of contracting parties hid problems of bargaining power and
imbalances of information. The analysis never extended to the problem of disentangled
goods and the wider problems of how consumers are linked through commodities to
wider human and non-human relationships.
The history of the treatment of objects in contract and Sale of Goods is a story of the
conflicts between free alienation of goods and the reality of their social histories. The
thing theory allowed for individual judgment and free alienation. The transformation to
the “descriptions” theory worked to plug one hole in the thing theory’s emphasis on the
phenomenal aspects of goods.
Simultaneously it re-instates the process-product
32
distinction where objects of exchange are understood as detached from their
background histories and linkages. Terms like “coffee” do not invoke the complexities
behind particular products, but rather single out the common physical features of
anything that falls under the description. Linguistic terms abstract from the contingent
and particular trajectories of goods as elements of commodity networks. The functional
analysis that courts developed in the nineteenth century also continues to contribute to
the same malaise; understanding objects in terms of end use purposes runs counter to
tracing their origins and transformations from natural resource inputs and human labour.
Commodity network approaches that stress human subjectivity as helping constitute
networks helps show how these legal constructions ultimately shape commodities
themselves. Insofar as the law influences our self-understanding, it comes to shape how
we think of the world and our place in it. Even legal fictions, developed to serve
idiosyncratic needs of the legal system, can become widely used metaphors and even
solidified so we miss their metaphoric qualities. Once commodity networks develop with
human subjectivity at their core, the concepts of objects from legal doctrine contribute to
the shape of those networks. Commodity networks work to provide humans particular
goods for particular purposes.
Consumer goods are increasingly understood as
constituted artifacts for human purposes—devices that matter in terms of utility. The
result is the “device paradigm” where objects, and the commodity networks of which they
are a part, come to be seen instrumentally, as something for us and our consumption.
Increased complexification and technological sophistication work to create a world of
products to which consumers can relate only in terms of utility. Someone who grows
their own food or bakes their own bread can derive aesthetic and evaluative rewards
from the interactions and process behind the goods they use, but the design of a
computer works to shield the consumer from (either desirable or undesirable) aspects of
its production.102 Ecological economics must then return to remind us of the glaringly
obvious: “Products and services are not only economic goods (measured in monetary
term) with a social meaning, but physical objects as well, tangible or-like many
services—otherwise physically enjoyed. No economic good exists without a physical
102Borgmann,
Albert "The Moral Complexion of Consumption." The Journal of Consumer
Research 26, no. 4 (2000): 418-22 at p 419.
33
footprint”.103
The functional approach was a measure to reconcile the needs of
exchange with the ways objects are also processes, histories and material flows but it
cannot control the instability.
By construing contract as open to the design of the individual parties, contract law also
provides the space for alternative conceptions of exchange. Workers co-operatives, fair
trade goods, or the planning of social movements can all make use of contracts as they
seek to re-order “society’s metabolic relations with nature via the growth of new
producer-consumer networks cemented by shared social values and commitments”.104
This provides hopes for overcoming impersonal market relations and lead to “socially reregulating and re-linking production, trade, and consumption in a manner that bridges
the widening global/local divide”.105
Contract theory and doctrine is one discourse
amongst many and exists in spaces of contention with other concepts of subjects,
objects and exchange.
Fair trade goods represent one way in which consumers can
begin to think differently about their engagement in exchange transactions. Discourses
of sustainable consumption suggest new ways that law is seeking to grasp the
interdependencies of economy, society and ecology that imply new concepts of subjects,
objects and exchange.
103Spangenberg,
J. H. (2004). The society, its products and the environmental role of
consumption. The Ecological Economics of Consumption. Lucia a Reisch and Inge Ropke.
Northampton, MA, Edward Elgar: 32-59.
p. 33
104 Goodman, D. and M. Goodman ibid. at p. 97
105 Raynolds, L.T. and D.L. Murray (1998) “Yes, we have no bananas: Re-regulating global and
regional trade” International Journal of Sociology of Agriculture & Food 7: 7-44
34